The value relevance of audit report under ifrs in the case of romanian listed companies

Abstract

On a financial market, investors need relevant and fair information on which to base their decisions. Investors seek instruments to assess the information quality which can indicate the stock that can reward them with high performance. To answer the investors’ problem, financial statements must be audited, receiving an opinion related to the quality of reported financial information. With the adoption of IFRS, can the audit report contain a professional, objective and independent opinion on the true and fair view of the financial statements, in the most significant aspects, related to the information that reflects financial position and performance, in accordance with an applicable accounting framework? The purpose of this study is to analyze, with the adoption of IFRS, if the auditors’ affiliation to the Big 4 and the audit opinion are value relevant for investors and have a significant impact on the stock price. To achieve the research objectives, a sample of 59 companies listed on Bucharest Stock Exchange (BSE) was selected. These companies use IFRS in financial reporting. To obtain the research results, multiple regression analysis, ANCOVA models and GLM were used. Data was collected from the financial statements of companies and from other reports provided by BSE. For data processing, SPSS 20.0 was used. The results achieved from the ANCOVA and GLM regression analysis indicate that information provided by the audit report, auditors’ affiliation to the Big 4 and the audit opinion, are value relevant for investors and have a significant impact on the stock price.